Economic Scene: Rethinking How to Split the Costs of Carbon

I have some good news for them, and some bad.

No, Apple hasn’t managed to produce the device without adding heat-trapping carbon to the air. The company expects an iPhone 5s to inject 70 kilograms — about 154 pounds — of carbon dioxide equivalent into the atmosphere over its lifetime, 11 pounds less than the iPhone 5 that Apple introduced last year.

The “good” news is that under the standard accounting of carbon emissions bandied about at climate talks, it’s not, mostly, Americans’ fault. About three-quarters of the carbon dioxide is considered the responsibility of other people — in places like China and Taiwan, South Korea and Inner Mongolia — where the phone and its parts were made.

The bad news is not just that the effort to curb global warming is as stuck as ever, but that, whether we like it or not, we’re all in this together.

The obstacles remain significant. Countless summit conferences since the Kyoto Protocol on climate change was adopted more than 15 years ago have failed to budge the fundamental roadblocks standing in the way of collective action: How should the costs be divided? Who did what to whom?

Globalization — which in the process of “exporting” production and jobs from rich to poor countries also “exported” the carbon dioxide emitted to make the products consumed by the rich countries — adds another complex twist to allocating responsibility for the carbon in the air. The disquieting question is this: Are emissions the responsibility of the countries that made them or of the countries for whom the products were made?

Two years ago, some of the greenest constituencies in the country asked Elizabeth Stanton and colleagues at the Stockholm Environment Institute-U.S. Center to perform a set of calculations on their carbon emissions. Rather than tally the carbon they produced, they wanted an inventory of the emissions generated in making, transporting, using and disposing of what they consumed.

They were in for a surprise. San Francisco, for example, generated only eight million metric tons of carbon dioxide equivalent in 2008. The city’s consumption, by contrast, added nearly 22 million tons of carbon to the air. Using consumption-based measurements, Oregon’s emissions in 2005 jumped to 78 million tons from 53 million.

“The people who hired us to do it saw themselves as so green and innovative,” said Frank Ackerman, who led the Climate Economics Group at the center at the time and now works with Ms. Stanton at Synapse Energy Economics, a consulting firm in Cambridge, Mass. “They thought that because they had nice initiatives going on they would come out lower, never mind the fact that a lot of the manufactures they consumed were made abroad.”

The focus on consumption makes sense. Understanding its impact on climate change is a necessary first step for families, and municipalities, to take concrete action to mitigate carbon emissions. This sort of recalculation, however, could have an unforeseen effect on the international politics of climate change by shifting responsibility on a global scale.

With the concentration of carbon dioxide in the air zooming last spring to its highest level since mastodons roamed the earth some three million years ago, the United Nations, against all odds, hopes 2014 will finally deliver the breakthroughs needed for the big carbon-spewing nations to agree on a plan by 2015.

“I challenge you to bring to the summit bold pledges,” urged the United Nations secretary Ban Ki-moon, as he invited global leaders to a nuts-and-bolts horse-trading meeting in New York next September.

The diplomacy of climate change appears as stuck as ever. Poor carbon-spewers like China justify their opposition to tight carbon limits on the grounds that, on a per-person basis, their emissions are still very low. Moreover, most of the carbon in the atmosphere now, they argue, was put there by Americans and other wealthy carbon-spewers, who burned a lot of fossil fuels on the way to getting rich. Forbidding the Chinese from doing the same would be tantamount to condemning them to stagnation.

Policy makers in Washington retort that while all this may be true, a deal that only required rich countries to limit emissions would be pointless: their carbon savings would be negated by growing emissions elsewhere. Heavy emitters of greenhouse gases — like the agriculture and chemical industry — would decamp from rich nations to the less carbon-restricted shores of the developing world.

Email: eporter@nytimes.com; Twitter: @portereduardo

This article has been revised to reflect the following correction:

Correction: December 24, 2013

An earlier version of this article gave incorrect figures for some emissions data. A study said that at least 1.2 billion tons’ worth of annual carbon dioxide emissions were exported from the developed to the developing world between 1990 and 2008, not 1.2 million tons’ worth. And in 2011 Europeans emitted 3.6 billion metric tons of carbon dioxide, not 3.6 million, and 4.8 billion tons were emitted to make things Europeans consumed, not 4.8 million.

This article has been revised to reflect the following correction:

Correction: December 25, 2013

An earlier version of a caption with this article misstated the emissions of the iPhone 5S relative to the iPhone 5. The 5S will release 11 pounds less carbon dioxide equivalent into the atmosphere than the iPhone 5, not 11 pounds more.

Bits Blog: Behind London Tech Scene, a Government Push

Economic Scene: Business Losing Clout in a G.O.P. Moving Right

How did corporate America lose control of the Republican Party?

From overhauling immigration laws to increasing spending on the nation’s aging infrastructure, big business leaders have seemed relatively powerless lately as the uncompromising Republicans they helped elect have steadfastly opposed some of their core legislative priorities.

The rift is not only unusual in light of the tight historical alignment between the business community and the G.O.P., but it is also outright incomprehensible after the Supreme Court’s Citizens United decision, which allowed companies to spend unlimited amounts from their corporate treasuries on the 2010 and 2012 elections.

Scholars have proposed many reasons for the rise of the anti-government activists that are pulling the G.O.P. to the right, leaving it at odds with a business community used to compromising and seeking favors from government.

But what may be most surprising is how reluctant big business has been to put its money on the line. To put it mildly, if companies could purchase the Congress of their choice, it’s unlikely they would buy the gridlocked Congress we have. The seemingly inexorable rise of political partisans — mainly on the right, but on the left, too — suggests that corporate money may be playing a much smaller role in the political process than expected.

Concern about the potential consequences of Citizens United stem from a not unreasonable belief that businesses will do anything on this side of the law — and sometimes beyond it — to produce legislation that serves their corporate interests.

So when the Supreme Court opened the sluice gate in 2010 allowing unlimited campaign contributions, pretty much every liberal voice in the country believed that a flood of corporate cash was about to deliver the political system to the Republican Party.

It was, President Obama said, “a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans.”

Three years later, however, these fears have not quite materialized. Money is flowing to elections like never before. The 2012 elections cost some $6.3 billion, $1 billion more than the 2008 elections, according to the Center for Responsive Politics, a nonprofit group that researches money and politics. Independent spending by outside groups on campaign advertisements and the like topped $1 billion last year.

Corporate America, however, accounted for a comparative trickle. Adam Bonica, a political scientist at Stanford University, points out in a recent working paper that companies openly spent about $75 million from their treasuries on federal elections last year.

Even if all the hidden money funneled into campaigns through private 501(c) organizations had come from businesses — unlikely given the contributions by noncorporate groups like Planned Parenthood and the N.R.A. — corporate spending would not reach $400 million, still a small share of the total.

Perhaps this should not be surprising. For companies, spending on elections can be risky. Business executives might prefer lobbying, where they spend far more than on campaign contributions, not because the limits are more relaxed but because swaying legislators on both sides of the aisle is more effective at getting what they want. And such lobbying is less likely to kindle anger among consumers, shareholders and other constituents than spending to change the outcome of elections.

“While Citizens alters the ability of corporations to contribute to campaigns, it does not alter their substantial risk in doing so,” the political scientists Wendy L. Hansen, Michael Rocca and Brittany Ortiz of the University of New Mexico, Albuquerque, argued in a recent study.

Still, corporations’ reluctance to open their checkbooks suggests an intriguing alternative explanation for the rise of Republicans who are willing to defy their will: companies may have spent too little. Their money was swamped by that of big individual donors who are more ideologically extreme. In 2012, the top 0.1 percent of donors contributed more than 44 percent of all campaign contributions. In 1980 their share of contributions was less than 10 percent.

Corporations have a pro-Republican bias, of course. But it is not quite as extreme as pop culture would have it, and is certainly less pronounced than organized labor’s pro-Democrat leanings.

Effective lobbying requires both Republican and Democratic friends. Political action committees run by businesses are known for spreading money on both sides of the partisan divide. They give to incumbents. They choose winners. They show little partisan loyalty.

In the 2006 elections, when the G.O.P. controlled Congress, corporate PACs gave 65 percent of their money to Republicans. In 2008 and 2010, after the Democrats had swept both the House and Senate, they split their contributions roughly fifty-fifty.

By contrast, substantial research in political science suggests that individual donors favor more ideological candidates and are less strategic in their giving. Big, frequent donors are particularly extreme.

E-mail: eporter@nytimes.com; Twitter: @portereduardo

Same Script by Bernanke, but Like a Farewell Scene

Mr. Bernanke, appearing before the Senate one day after he testified before the House, largely repeated the themes and often the words of Wednesday’s testimony.

He said that the Fed had not slackened in its commitment to stimulate the economy — it will cut back only if the economy is making progress. He chastised Congress, saying it was impeding economic growth. And he demurred from talking about his own future, choosing instead to listen quietly as senator after senator treated the hearing like a goodbye party.

This may have been Mr. Bernanke’s final appearance before Congress as Fed chairman. It is widely expected that he will step down in January.

His last decision is when the Fed should begin to reduce its stimulus efforts. The Fed is buying $85 billion a month in Treasuries and mortgage-backed securities.

Mr. Bernanke said on Thursday that the Fed had concluded that such purchases, aimed at reducing long-term interest rates, do less to bolster the economy than the Fed’s traditional focus on reducing short-term rates. He also suggested that in announcing a timeline for tapering last month, the Fed had succeeded in tempering risk-taking in financial markets.

But he once again resisted the idea that the Fed was lowering its sights.

“Isn’t it still way too soon to consider any kind of policy tightening?” Senator Robert Menendez of New Jersey asked Mr. Bernanke, citing the persistently high level of unemployment and the absence of inflationary pressures.

Mr. Bernanke responded that the Fed was changing its approach, not its goals. In testimony, he underscored that the central bank had other tools at its disposal, besides asset purchases.

“I think that we will be able to maintain that high level of accommodation ultimately through rate policy and, you know — and by holding a very large balance sheet,” he said.

Some economists, including Adam S. Posen, president of the Peterson Institute for International Economics, argue that the Fed is making the wrong choice. Mr. Posen describes the Fed’s statements about its plans to hold down interest rates as “cheap talk,” and says it should continue with bond-buying instead.

A further complication for the Fed is that Mr. Bernanke’s likely departure is beginning to erode his credibility as a spokesman about the Fed’s future plans.

Mr. Bernanke has said that the Fed expects to reduce its bond-buying later this year, and to end purchases by the middle of next year, as long as economic growth remains “broadly” in line with the Fed’s expectations.

“We have given some fairly specific qualitative guidance about what we’re looking for,” he said Thursday. Specifically, the Fed wants the unemployment rate to decline from the current rate of 7.6 percent to a rate “in the general vicinity of 7 percent with inflation moving back toward this 2 percent objective.”

The Fed, however, has not included that guidance in its policy statements. And an account of the most recent meeting of the Federal Open Market Committee noted that “about half” of the 19 officials who participated said before the meeting that they expected to end asset purchases by the end of this year.

Senator Charles E. Schumer, Democrat of New York, asked Mr. Bernanke about the apparent disagreement over the question of how much longer the Fed should continue its current bond-buying campaign.

“There seems to be some disparity between the other members and you, and if you’re not there come next year, there’s a worry there,” Mr. Schumer said. “Do they think unemployment will be 7 percent this year, or do they have different assessments about the relative cost and benefit of” quantitative easing?

Mr. Bernanke responded that officials had various reasons for their views. Some regard asset purchases as ineffective, while others may be more optimistic about the economy. But he added that the committee had “a very careful discussion” that led to his public statement about the probable timetable for tapering.

“The general scenario which I described in my press conference is broadly supported by people on the committee and including both voters and nonvoters,” he said.

Economic Scene: Examinations of Health Costs Overlook Mergers

But when the Federal Trade Commission finally decided to look at the deal, it encountered an entirely different objective: to gain market power.

Mark Neaman, Evanston’s chief executive, had told his board that the deal would “increase our leverage, limited as it might be,” the investigation found, and “help our negotiating posture” with managed care organizations. The commission caught Ronald Spaeth, the Highland Park C.E.O., talking about the corporation’s three hospitals and explaining how “it would be real tough for any of the Fortune 40 companies in this area whose C.E.O.'s either use this place or that place to walk from Evanston, Highland Park, Glenbrook and 1,700 of their doctors."

It was a great deal for the hospitals. The fees they charged to insurers soared. One insurer, UniCare, said it had to accept a jump of 7 to 30 percent for its health maintenance organizations and 80 percent for its preferred provider organizations.

Aetna said it swallowed price increases of 45 to 47 percent over a three-year period. “There probably would have been a walkaway point with the two independently,” testified Robert Mendonsa, an Aetna general manager for sales and network contracting. “But with the two together, that was a different conversation.”

And who was left holding the bag? Not the shareholders of UniCare or Aetna. It was the people who bought their policies, who either paid higher premiums directly or whose wages grew more slowly to compensate for the rising cost of their company health plans.

The commission’s unusual investigation of the aftermath of the Evanston-Highland Park deal produced its first successful antitrust case against a hospital merger since 1990, after a string of defeats in court. Highland Park and Evanston were forced to negotiate separately with insurers, rather than as a bundle. Collusion was forbidden.

What was learned from the investigation is more relevant than ever today. It should draw policy makers’ attention to an elephant in the room that appears to have been overlooked in the debate over how to rein in the galloping cost of health care: a lack of competition in what is now America’s biggest business — accounting for almost 18 percent of the nation’s gross domestic product.

Our anguished search for ways to slow runaway health spending has so far mostly focused on how to eliminate waste: Might the fee-for-service system used by health care providers across the nation provide perverse incentives for doctors and hospitals to prescribe costly yet pointless treatments? Are doctors prescribing every possible test to insulate themselves from any conceivable lawsuit?

The Obama administration is betting heavily on waste control to address the problem. It has offered incentives for accountable care organizations, which get a bundled payment to keep a patient in good health rather than charge for individual procedures. It has financed research into comparative effectiveness — hoping to steer patients to the best therapies.

What is missing from the stampede of policy innovation is something to tackle one of the best-known causes of high costs in the book: excessive market concentration.

Two decades ago, there were on average about four rival hospital systems of roughly equal size in each metropolitan area, according to research by Martin S. Gaynor of Carnegie Mellon University and Robert J. Town of the University of Pennsylvania. By 2006, the number of competitors was down to three.

The share of metropolitan areas with highly concentrated hospital markets, by the standards of antitrust enforcers at the Justice Department and the Federal Trade Commission, rose to 77 percent from 63 percent over the period.

And consolidation is continuing. Professor Gaynor counts more than 1,000 hospital system mergers since the mid-1990s, often involving dozens of hospitals. In 2002 doctors owned about three in four physician practices. By 2008 more than half were owned by hospitals.

If there is one thing that economists know, it is that market concentration drives prices up — and quality and innovation down.

Research by Leemore S. Dafny of Northwestern University, for instance, found that hospitals raise prices by about 40 percent after the merger of nearby rivals.

Other studies have found that hospital mergers increase the number of uninsured in the vicinity. Still others even suggest that market concentration may hurt the quality of care.

Economic Scene: Economic Statistics Miss the Benefits of Technology

I traveled to Japan with a Tandy TRS-80 portable computer, which ran on AA batteries and had plastic cups to put over the phone receiver. It transmitted copy at the blistering speed of 300 bits per second. And I wrote about Mexico’s tequila crisis of 1994 without the benefit of a full set of Mexican financial statistics a few clicks away.

From my perspective, the evolution of the tools of journalism between then and now has been nothing less than breathtaking.

Articles are more thorough — informed by complementary data and analysis, enriched with links to things like interactive charts, videos and slide shows. They get to readers much more quickly. Most important, they reach many more of them.

For all its financial troubles, never has The New York Times been read by more people: 44 million unique viewers online in the United States every month. Yet if you were to rummage through American economic statistics you would find little evidence of journalism’s technological leaps. Measured by its contribution to gross domestic product, the most prominent indicator of the nation’s economic well-being, much of this new journalistic value enabled by information technology is not worth much.

This is true not only of journalism. The failure of I.T. to deliver measurable value has been a popular meme among economists for years. Back in 1987 Nobel laureate Robert Solow posed a now famous paradox: “We can see the computers everywhere except in the productivity statistics.”

The meme is back. The burst of productivity during the dot-com revolution of the 1990s gave skeptics pause. But as productivity has slowed substantially in recent years, doubts have re-emerged about whether information technology can power economic growth like the steam engine and the internal combustion engine did in the past.

Last year, Robert J. Gordon of Northwestern University proposed that the I.T. revolution has pretty must exhausted its promise. He asked, provocatively: “Is U.S. economic growth over?” And he forecast stagnating living standards for the vast majority of Americans for decades to come.

Government statistics lend support to his skepticism: Value added by the information technology and communications industries — mostly hardware and software — has remained stuck at around 4 percent of the nation’s economic output for the last quarter century.

But these statistics do not tell the whole story. Because they miss much of what technology does for people’s well-being.

News organizations that take advantage of computers to let go of journalists, secretaries and research assistants will show up in the economic statistics as more productive, making more with less. But statisticians have no way to value more thorough, useful, fact-dense articles.

What’s more, gross domestic product only values the goods and services people pay for. It does not capture the value to consumers of economic improvements that are given away free. And until recently this is what media organizations like The New York Times were doing online.

The Commerce Department is in the process of revising the way it measures G.D.P. to take better account of the contributions of investment in research and development and artistic creation. But even though the revisions to be announced this summer are expected to make the economy look bigger, they are not devised to capture the value that Americans get from digital technologies.

“G.D.P. is not a measure of how much value is produced for consumers,” said Erik Brynjolfsson of the Massachusetts Institute of Technology. “Everybody should recognize that G.D.P. is not a welfare metric.”

G.D.P. misses what Americans gain from sharing information on Facebook or finding information on Google or Wikipedia. It misses how dating sites reduce the cost and increase the odds of finding a mate. It misses the time saved by drivers who use Google maps and the time gained by consumers from shopping online. Measured in money — what it contributes to G.D.P. — the recording industry is shrinking. Yet never before have Americans had access to so much music.

Economic Scene: Mexico’s 1980s Austerity Experience Holds Lesson for Europe

His approach to economics was unorthodox but creative. He tried to raise oil prices by sheer force of will — firing the director of the state oil company Pemex for having the temerity to reduce the price of Mexican crude as oil plummeted on international markets. He froze dollar accounts in local banks to try to stem capital flight.

But the canine defense didn’t work. In 1982, interest on the country’s foreign debt swallowed almost two-thirds of its export revenue. In February, the Mexican currency started plummeting. In August, Jesús Silva Herzog, Mexico’s finance minister, flew to Washington to tell Paul Volcker at the Federal Reserve and Donald Regan at the Treasury Department that Mexico could not make its coming payments to American and other foreign banks.

Tweak a few of the details and Mexico in the 1980s looks a lot like most Southern European countries today. In Mexico’s case, runaway government spending in the 1970s, fueled by high oil prices and greased by foreign debt, threatened to bankrupt the country after the Fed sharply raised interest rates to curb rampant inflation in the United States, increasing Mexico’s interest payments even as oil prices crashed to earth.

Similarly, money poured into Spain and Greece when investors persuaded themselves that the bonds of all members of the euro zone should be as safe as Germany’s, the region’s most creditworthy country. In Greece, this allowed a government spending binge. In Spain it ignited a housing bubble. Both countries were left with an unbearable burden when the world economy hit a wall, creditors took flight and the money stopped.

European decision-making during the crisis of the last few years also shares some of the erratic nature of Mexican policy under President López Portillo. Cyprus was somehow allowed to threaten the euro area’s banking system. European leaders then “solved” the problem by imposing capital controls that — like those tried by Mexico — are unlikely to work and will undoubtedly provide new headaches down the road.

But the most relevant parallel is one that European leaders refuse to see. If there is one overwhelming lesson from the debt crisis that struck Mexico and other Latin American countries so hard three decades ago, it is that countries that cannot grow will not pay. It is up to creditors, too, to allow them to grow. It took Mexico and its lenders seven years to figure that out. The European crisis is in its fifth year. You would think they might have learned something by now, but no.

Mexicans remember what happened after Mr. Silva Herzog’s flight to Washington as the “lost decade.” Miguel de la Madrid, who took over as president the following December, promised deep budget cuts in exchange for bridge loans and debt rescheduling. That didn’t work, so Mexico cut a new deal, getting new loans from commercial banks, the United States and the International Monetary Fund, in exchange for cutting government payrolls and subsidies, selling state-run companies and opening the country to foreign trade.

I started college a little before Mr. Silva Herzog’s trip. In the five-plus years it took me to get a degree (Mexican degrees take longer) the Mexican economy contracted about 2 percent. By the time I got my graduate degree two years later, gross domestic product per person was 8 percent less than it had been in 1982.

Yet despite the enforced austerity, Mexico’s foreign debt in 1988 still amounted to 56.5 percent of Mexico’s economic output, more than it had six years before.

This must sound familiar to Europe’s unemployed. If anything it’s far worse there. The Greek economy has shrunk more than a fifth over the last five years. Government debt amounts to about 170 percent of the economy; it was 100 percent when the crisis started. The economies of Ireland, Portugal, Spain and Italy are smaller, too, than they were five years ago. Their debt burden is heavier. And still, European leaders insist that more of the same must be the solution.

E-mail: eporter@nytimes.com;

Twitter: @portereduardo

Economic Scene: Health Care and Pursuit of Profit Make a Poor Mix

Patients entering church-affiliated nonprofit homes were prescribed drugs roughly as often as those entering profit-making “proprietary” institutions. But patients in proprietary homes received, on average, more than four times the dose as patients at nonprofits.

Writing about his colleagues’ research in his 1988 book “The Nonprofit Economy,” the economist Burton Weisbrod provided a straightforward explanation: “differences in the pursuit of profit.” Sedatives are cheap, Mr. Weisbrod noted. “Less expensive than, say, giving special attention to more active patients who need to be kept busy.”

This behavior was hardly surprising. Hospitals run for profit are also less likely than nonprofit and government-run institutions to offer services like home health care and psychiatric emergency care, which are not as profitable as open-heart surgery.

A shareholder might even applaud the creativity with which profit-seeking institutions go about seeking profit. But the consequences of this pursuit might not be so great for other stakeholders in the system — patients, for instance. One study found that patients’ mortality rates spiked when nonprofit hospitals switched to become profit-making, and their staff levels declined.

These profit-maximizing tactics point to a troubling conflict of interest that goes beyond the private delivery of health care. They raise a broader, more important question: How much should we rely on the private sector to satisfy broad social needs?

From health to pensions to education, the United States relies on private enterprise more than pretty much every other advanced, industrial nation to provide essential social services. The government pays Medicare Advantage plans to deliver health care to aging Americans. It provides a tax break to encourage employers to cover workers under 65.

Businesses devote almost 6 percent of the nation’s economic output to pay for health insurance for their employees. This amounts to nine times similar private spending on health benefits across the Organization for Economic Cooperation and Development, on average. Private plans cover more than a third of pension benefits. The average for 30 countries in the O.E.C.D. is just over one-fifth.

We let the private sector handle tasks other countries would never dream of moving outside the government’s purview. Consider bail bondsmen and their rugged sidekicks, the bounty hunters. American TV audiences may reminisce fondly about Lee Majors in “The Fall Guy” chasing bad guys in a souped-up GMC truck — a cheap way to get felons to court. People in most other nations see them as an undue commercial intrusion into the criminal justice system that discriminates against the poor.

Our reliance on private enterprise to provide the most essential services stems, in part, from a more narrow understanding of our collective responsibility to provide social goods. Private American health care has stood out for decades among industrial nations, where public universal coverage has long been considered a right of citizenship. But our faith in private solutions also draws an ingrained belief that big government serves too many disparate objectives and must cater to too many conflicting interests to deliver services fairly and effectively.

Our trust appears undeserved, however. Our track record suggests that handing over responsibility for social goals to private enterprise is providing us with social goods of lower quality, distributed more inequitably and at a higher cost than if government delivered or paid for them directly.

The government’s most expensive housing support program — it will cost about $140 billion this year — is a tax break for individuals to buy homes on the private market. According to the Tax Policy Center, this break will benefit only 20 percent of mostly well-to-do taxpayers, and most economists agree that it does nothing to further its purported goal of increasing homeownership. Tax breaks for private pensions also mostly benefit the wealthy. And 401(k) plans are riskier and costlier to administer than Social Security.

From the high administrative costs incurred by health insurers to screen out sick patients to the array of expensive treatments prescribed by doctors who earn more money for every treatment they provide, our private health care industry provides perhaps the clearest illustration of how the profit motive can send incentives astray.

By many objective measures, the mostly private American system delivers worse value for money than every other in the developed world. We spend nearly 18 percent of the nation’s economic output on health care and still manage to leave tens of millions of Americans without adequate access to care.

Britain gets universal coverage for 10 percent of gross domestic product. Germany and France for 12 percent. What’s more, our free market for health services produces no better health than the public health care systems in other advanced nations. On some measures — infant mortality, for instance — it does much worse.

In a way, private delivery of health care misleads Americans about the financial burdens they must bear to lead an adequate existence. If they were to consider the additional private spending on health care as a form of tax — an indispensable cost to live a healthy life — the nation’s tax bill would rise to about 31 percent from 25 percent of the nation’s G.D.P. — much closer to the 34 percent average across the O.E.C.D.

A quarter of a century ago, a belief swept across America that we could reduce the ballooning costs of the government’s health care entitlements just by handing over their management to the private sector. Profit-seeking private firms would have a strong incentive to identify and wipe out wasteful treatment. They could encourage healthy lifestyles among beneficiaries, lowering their use of costly care. Competition for government contracts would keep the overall price down.

We now know this didn’t work as advertised. Competition wasn’t as robust as hoped. Health maintenance organizations didn’t keep costs in check, and they spent heavily on administration and screening to enroll only the healthiest, most profitable beneficiaries.

One study of Medicare spending found that the program saved no money by relying on H.M.O.’s. Another found that moving Medicaid recipients into H.M.O.’s increased the average cost per beneficiary by 12 percent with no improvement in the quality of care for the poor. Two years ago, President Obama’s health care law cut almost $150 billion from Medicare simply by reducing payments to private plans that provide similar care to plain vanilla Medicare at a higher cost.

Today, again, entitlements are at the center of the national debate. Our elected officials are consumed by slashing a budget deficit that is expected to balloon over coming decades. With both Democrats and Republicans unwilling to raise taxes on the middle class, the discussion is quickly boiling down to how deeply entitlements must be cut.

We may want to broaden the debate. The relevant question is how best we can serve our social needs at the lowest possible cost. One answer is that we have a lot of room to do better. Improving the delivery of social services like health care and pensions may be possible without increasing the burden on American families, simply by removing the profit motive from the equation.

Economic Scene: Say Goodbye to the Government, Under Either Fiscal Plan

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Economic Scene: At the Polls, Choose Your Capitalism

Faced with sharply contrasting approaches to our troubles, voters must grapple with two critical questions: What is the nature of our problem, and how did we get here? Above all, we must confront the way our choices, as a society, have shaped our predicament.

The sense of economic vulnerability weighing over the middle class has been building for decades, beginning well before the financial crisis and recession that scarred the last four years. We explain it to ourselves as a product of forces beyond our control: technology, which automated many formerly good jobs, or globalization, which put American workers in direct competition with cheaper labor in poor countries around the world. These relentless dynamics have sent unheard-of profits toward the prosperous few while threatening the jobs and eroding the wages of the rest.

This understanding, while broadly accurate, ignores the role of our choices in managing the powerful global dynamics. Over the last three decades, every country in the world has been buffeted by globalization and technology advancing at a breakneck speed. But we have charted a unique course through the turbulent global waters, building a more cutthroat form of capitalism than most other industrial nations. We are more skeptical of government and willing to accept market outcomes, including high inequality and deep poverty. More than citizens of other countries, we tend to believe that success, like failure, is deserved.

Our form of capitalism has led us to where we are today. The United States may be good at generating wealth. It is arguably one of the most innovative and entrepreneurial economies in the world, producing technologies that have been essential to powering global growth. But the American way has not been effective at transforming affluence into broad-based well-being.

It may look as if our social and economic woes are a product of rampant globalization. To a large degree, however, they are a consequence of how we have chosen to address the opportunities and challenges of our high-tech, globalized world. Our cutthroat approach to capitalism has exacted high social costs.

The United States is probably less globalized than most other rich countries. Our total trade — the sum of our imports and exports — peaked at about 31 percent of our total economic production in 2008, according to the Organization for Economic Cooperation and Development. By contrast, in Canada it amounted to 69 percent of the economy that year. In 2008, imports had only about 17 percent of the United States market, the smallest share among the industrialized nations in the O.E.C.D. In Germany that share was 44 percent.

In some ways we have reaped great rewards from our interconnected world. On average, income per person has grown 71 percent over the last 30 years, after adjusting for inflation. This puts us in 16th place among the list of 29 advanced countries tracked by the International Monetary Fund over the period. There are only a handful of places — Singapore, Norway, Luxembourg and Hong Kong — that enjoy a higher average income per person than the United States.

Yet for all the riches we have amassed, by the O.E.C.D.’s calculation, the income of Americans of working age in the middle of the distribution has grown less since the mid-1980s than in virtually every other developed nation. Perhaps unsurprisingly, we suffer from some of the worse social ills known to the industrialized world.

It is not just that income inequality is the most acute of any industrialized country. More American children die before reaching age 19 than in any other rich country in the O.E.C.D. More live in poverty. Many more are obese. When they reach their teenage years, American girls are much more likely to become pregnant and have babies than teenagers anywhere else in the industrial world.

We understand the importance of early childhood development. Yet our public spending on early childhood is the most meager among advanced nations. We value education. Yet our rate of enrolling 3- to 5-year-olds in preschool programs is among the lowest among advanced nations. Our 15-year-olds place 26th out of 38 countries on international tests of mathematical literacy, according to the O.E.C.D. The first nation to understand the value of widespread college education, the United States has dropped from the top to the middle of the pack of our economically advanced peers in terms of college graduation rates.

The American way has produced a high-tech health care system that offers sophisticated cures for those who can afford them, yet is astronomically expensive and poor at combating many run-of-the-mill ailments, and leaves millions uninsured.

Our safety net — to protect the most vulnerable from globalization’s ravages — is threadbare. Where would you rather lose your job to cheap competition from China? In the United States you would lose health care, too — unless you had the money to buy private insurance. If you were the breadwinner in a family of four earning the average wage, benefits would replace only 52 percent of it, even including any extra welfare payments you were entitled to, the O.E.C.D. found. And they would drop to 37 percent of your last wage after two years tops. In Britain, by contrast, you would still receive over 70 percent of your wage for 60 months after you lost your job. And your health care needs would be addressed by the public, universal National Health Service.

A particularly telling statistic speaks of how we deal with social dysfunction: there are 743 Americans in jail for every 100,000. That’s more than in any other country in the world, according to the International Center for Prison Studies. The next country down the list is Rwanda, with 595.

Social ills like obesity and child mortality have, of course, multiple and complex causes. But the battery of dismal statistics suggests, at the very least, a troubling pattern. Yet though we seem to suffer more than our fair share of social ills, by the O.E.C.D.’s calculation our public spending to address them is smaller as a share of the economy than in any other country in the developed world.

Daron Acemoglu of the Massachusetts Institute of Technology, James Robinson of Harvard and Thierry Verdier of the Paris School of Economics have proposed an economic taxonomy that divides the world into two types: cuddly countries like those in Scandinavia, where robust governments manage big social welfare systems, and cutthroat capitalists like the United States, willing to tolerate more inequity to encourage effort and entrepreneurship. Life might be better in cuddlier spots. But harsh as life in cutthroat nations may be, the world needs us to grow.

Americans work longer hours than workers in any other highly developed country, the authors note, perhaps because handing over a smaller slice of our income in taxes makes us willing to do so. Most important, they argue, the United States produces the greatest share of the world’s technological breakthroughs and innovations, the main fuel of the world’s economic growth.

In trying to reconcile the entrepreneurial spirit that the American brand of capitalism provides with its social costs, American voters must choose between Mitt Romney, the businessman who offers to move the economy forward by making government smaller and more efficient, and President Obama, who offers the government as an agent to assist the less prosperous, to put a thumb on the scale on the side of the have-nots.

The taxonomy developed by Mr. Acemoglu, Mr. Robinson and Mr. Verdier may strike voters as too crude a rendering of societies’ complexities. Their proposition that a cuddly America would lead to less innovation and growth around the world has come in for some harsh criticism. But they offer voters a fundamental insight: when it comes to dealing with the challenges brought about by overwhelming global forces, there is a choice.

E-mail: eporter@nytimes.com;

Twitter: @portereduardo

Economic Scene: U.S. Economy Is Doing Well Compared With Other Nations

Today, Republicans around the country are largely campaigning on the president’s words. Conservative economists like Michael Bordo of Rutgers and John B. Taylor of Stanford have written columns for op-ed pages and blogs arguing that by the standard of previous American recessions, the economy should have rebounded much more strongly.

Running with this argument, Glenn Hubbard and Kevin Hassett, economic advisers to the Republican challenger, Mitt Romney, have accused the administration of providing a misguided short-term fiscal stimulus that ultimately contributed to a long period of below-par growth. And Mr. Romney has borrowed a tactic used by Ronald Reagan to defeat Jimmy Carter in 1980, using his acceptance speech at the Republican National Convention to intone “this president cannot tell us that YOU are better off today than when he took office.”

Whether you are better off today than in 2009 may not be the most useful question to ask about an economy emerging from its most severe downturn in 80 years. A more illuminating question is how we have done relative to other countries that were caught in the global financial cataclysm. By that standard, economic growth in the United States has done surprisingly well.

The president’s early assessment of our economic troubles was wildly optimistic. By the administration’s early forecast the economy would be growing by 4.6 percent this year. Instead, it is probably going to expand just over 2 percent this year and next. Economic production per person has not recovered to its level before the recession. Unemployment is still painfully high, at 7.8 percent. The share of the population with a job remains near its lowest in 30 years.

But glance across the Atlantic. The economy of the European Union will shrink by 0.2 percent this year, according to the International Monetary Fund. It is smaller than it was five years ago, while the American economy is 2.9 percent bigger. Even Europe’s most competitive countries are slipping. The Dutch economy is shrinking. Germany and Austria are expected to grow at half the rate of the United States this year and next.

Some will argue that Europe makes for an easy comparison. The European Central Bank held the economy back for many months by refusing to slash interest rates aggressively or pump money into the economy. Germany’s insistence that indebted Mediterranean countries cut government spending deepened recessions in those nations. And some other developed countries are growing faster than the United States: Canada, which didn’t have a banking crisis to begin with; Australia, a big exporter of raw materials that benefited greatly from China’s growth; the oil exporter Norway.

Yet the United States has recovered more quickly than other countries that don’t use the euro — including Japan, New Zealand, Denmark and Britain. The performance is all the more remarkable considering that the financial crisis that sent much of the world into recession was set off by American homeowners defaulting on their mortgages, taking down a big chunk of the nation’s banking sector.

The one crucial area in which the United States has performed worse than its peers is in jobs. Joblessness is at record highs in countries like Spain and Greece. But many European countries have done a much better job of protecting employment than the United States. In Austria, Germany and Belgium, the governments paid companies to put workers on short-time work rather than lay them off. Sweden also has a longstanding wage subsidy.

Alongside stronger unions and stiffer employment regulations that make it tougher to fire workers, these countries managed to prevent soaring unemployment. Total employment in Britain, Germany, the Netherlands, Austria, France and even Italy has recovered more since the financial crisis than it has in the United States. Though the United States has grown faster than France since 2007, the unemployment rate has risen higher here.

Yet the president’s critics are not suggesting the government should have subsidized wages or financed more public works. Rather, they have championed the type of budget-cutting policies that have played such a large role in thwarting economic growth in Europe.

Federal Reserve officials today concede they were too slow to respond to the crisis. The Fed was nonetheless far more aggressive than the European Central Bank, quicker to drop interest rates to zero and pump money into the economy, buying government debt and other bonds. Fiscal stimulus — an initial $800 billion package in 2009 followed by about $600 billion in payroll tax cuts and other efforts — was bigger and more sustained than in other advanced countries. Banks in the United States were forced to raise billions in new capital, which allowed them to cope with the turbulent financial markets better than their European peers.

Every step was an uphill battle. The Republicans who took control of the House of Representatives in 2010 argued that fiscal stimulus was wasted and counterproductive, and pressed for German-style austerity. During the Republican primaries, the Texas governor, Rick Perry, accused the Federal Reserve chairman, Ben S. Bernanke, of treason for debasing the currency by printing money to buy debt.

Today, most economists say they believe that these policies provided vital support to the economy. In its most recent World Economic Outlook, published this month, the I.M.F. acknowledged that the fiscal stimulus was probably much more effective at bolstering growth than it had previously allowed.

So where does this leave President Obama’s record? The Harvard economists Carmen M. Reinhart and Kenneth S. Rogoff, whose 2009 book “This Time Is Different” is the most comprehensive study of financial crises and their aftermath, contend that the comparison by Mr. Hubbard, Mr. Bordo and others is flawed. It mixes relatively mild recessions with deep financial crises that blew up the banking system. Recovering from the latter, they say, is painfully slow and difficult.

By Ms. Reinhart’s and Mr. Rogoff’s accounting, the Obama administration’s record on economic growth is pretty good: “If one really wants to focus just on United States systemic financial crises, then the recent recovery looks positively brisk,” they conclude. Among countries that suffered as deep a financial crisis as we did since 2008 — from Greece and Iceland to Germany and Britain — “the United States’ output performance is, in fact, among the best.” Even the American jobs market looks brighter when compared with other big financial crises in history.

Charles Dumas, chairman of the economic consulting firm Lombard Street Research in London, sees an American economy poised to rebound in the next presidential term. Household debt has fallen from its peak, and rock-bottom interest rates mean homeowners are spending only 14 percent of their disposable income on debt payments, the lowest level since 1992. The budget deficit is already down to 8.7 percent of economic output, from 13.3 percent in 2009. Even China is less of a problem, as high inflation has mostly eliminated its currency undervaluation.

According to most polls, President Obama is still the favorite to lead the country through such a rebound. If he loses in November, it won’t be because he provided too much fiscal stimulus. It will more likely be because on arguably the most important economic variable for American voters, jobs, he didn’t try hard enough.

E-mail: eporter@nytimes.com;

Twitter: @portereduardo

Economic Scene: Debating Real Value of Health Benefits in Poverty Calculations

In July, the Congressional Budget Office — the nonpartisan arbiter of the costs and consequences of government spending — decided that we had not been valuing these benefits enough. In a report on how income and taxes are distributed across the population, it decided, for the first time, to value health benefits provided by the government at every penny they cost.

The decision stoked a long-simmering debate about how much health care is really worth to poor families who may not have enough to eat. The reclassification of health benefits added $4,600 a year to households in the bottom fifth of income. It shrank the nation’s yawning income gap and muted the increase of inequality over the last three decades. And it changed the picture of what the government does for Americans.

The reasoning behind the budget office’s action seems to make lots of sense: the government spends almost $8,000 on the average Medicaid beneficiary and more than $12,000 for each person on Medicare. Why shouldn’t that count as income? Without it, the recipients could not afford an essential, lifesaving service. Moreover, the budget office considers Social Security benefits as income. And that’s the way it treats the health insurance provided by employers to their workers.

But not everyone thinks health care is worth that much. In particular, the Census Bureau does not include health care and other noncash benefits when computing the official poverty rate. Even its Supplemental Poverty Measure — which was created to capture noncash sources of income, as well as all the costs faced by the poor — sets the value of Medicare and Medicaid at zero.

That approach is not unreasonable, either. To paraphrase Timothy Smeeding, the director of the Institute for Research on Poverty at the University of Wisconsin-Madison: you can’t eat health care. Medicaid benefits are enough to lift many people out of poverty statistically even if they don’t have enough money to afford housing, utilities and food.

And the addition of those benefits could alter how we view our progress. From 2000 to 2010, government spending for each Medicare recipient rose by two-thirds after inflation. But those increases probably didn’t make seniors feel wealthier, especially since their out-of-pocket expenses for medical care rose, too.

For years, the Congressional Budget Office followed the general approach of the Census Bureau: health benefits were worth only the amount that a family otherwise would have spent on doctors and other medical services — that is, money that could be used on something else. So Medicare, Medicaid or Children’s Health Insurance Program benefits to a family that didn’t have enough money to satisfy necessities like food, shelter and utilities were valued at zero, because without the government benefits the family wouldn’t spend on medical care at all.

The change in approach alters the calculation of who is living in poverty. Including these health benefits at face value raises by 25 percent the income of households in the poorest fifth of the population, to $23,300 in 2009 from $18,900 under the previous calculation. This is more than three times the average income of the poorest fifth of households before federal taxes and government benefits kick in, which in 2009 was $7,600. The gains from the new calculations are enough to vault a family of two parents and two children over the Census Bureau’s official poverty line of $21,756 and to almost breach the supplemental measure’s threshold of $23,854.

Because two-thirds of Medicare funds and 83 percent of Medicaid funds are spent on the poorest 40 percent of the population, the shift also narrows the nation’s income gap. Under the budget office’s old method, the richest fifth of American households made more than nine times the incomes of the poorest fifth, after taxes and government benefits. Under the new method, the rich take home less than 7.5 times what the poor do.

The new definition of income removes many seniors from the poorest group of Americans, as they are big consumers of Medicare. And it pushes more working families to the bottom of the income scale.

Accounting for health care this way also changes the view of what government actually accomplishes. Social scientists have noted with some dismay that taxes and government transfer payments have become less effective over the last 30 years at narrowing the income gap in American society. But including health benefits changes the outcome significantly because health care is becoming a much bigger part of government spending.

Under the budget office’s old methods, taxes and government spending in 2007 narrowed the income gap by 17 percent, as measured by the Gini index, which ranges from 0 when everybody has the same income to 1 when one plutocrat hoards it all. Including all government health spending as income, the government reduced inequality by 21 percent.

E-mail: eporter@nytimes.com; Twitter: @portereduardo